Saturday, February 18, 2017

Cuban Society and Economic Development. Confronting Neoliberalism

Writing about Cuban economy in Cubadebate, Jose Luis Rodriguez (ex Minister of Economy in Cuba, current Advisor, Centre for Research on the World Economy) explains Cuban economic performance in a challenging period while he highlights concerns Cuba faces, economic areas such as export of goods and services, imports, national oil production and the national external debt.

Yet, among his serious challenges Rodriguez includes the impact the passing of Fidel Castro, has had on Cuba and its people. It was a bad year but one that included a particular bad thing, the passing of Fidel. It is clear for us to see the loss of their “commander in chief,” the historic leader of the Cuban Revolution, who Rodriguez describes as “the most brilliant disciple of Jose Marti” (Marti himself being a Latin American hero), has been painful to Cubans.

Thus, Cuban perspective continues to be capable of including human pain and heart aches among the challenges in their economic reports. Good for them. It is interesting though that for most economic models human pain, heart ache, loss, does not count for much. Imagine how different our economic reports would be if the heart aches of the unemployed or underemployed, the pain of the homeless or those who have lost their homes because of financial woes were included. And what about the personal pain of women, of men, and children with no access to health care, free education and basics in the world? We manage to present rosy pictures of ugly times by leaving human suffering and pain mostly outside economic reports, evaluations and discussions.

Thus, we can accept a criminal economic model and call it euphemistically “neoliberal” –nothing new about it, nothing particularly liberal either, or capitalism with a human face, a true oxymoron. Even our focus on growth and increased wealth for the top layer of society goes without question. We allow, unfortunately, similar perspectives to dominate our understanding of the world, nature and our lives, causing heart ache, loss and destruction. But, heart ache and loss is difficult to measure, and growth per growth sake is our motto. A lot of good will happens when heart ache and loss are in, making visible the invisible, hopefully propelling us towards healthier directions –for us, other species, the environment, the world, and nature.

Cubans loss their historic leader and we may or may not understand the value of leadership as we are used to live without it.

Leadership used to be a positive thing, even a must, but lately whenever leaders emerge our masters move fast to suppress them, ending their lives or vanishing them, leadership not being allowed any longer in the political scene. Such are the forces behind our economies, they are powerful, relentless, and mean, and even though deep inside we all know we follow a crazy model we follow it anyway, and keep moving forward, taking our world with us.

We move fast surrounded by a hurricane of uninspiring actions and inactions, while inspiring visions are deemed without value, and worthwhile projects are turned into dust -by reason or by force; we are left alone to live lives in poverty or overconsumption.

No balance, we consume everything in sight when feasible, food, fuel, clothes, goods and services, and irreplaceable amounts of energy.

Consuming may fail to make us happy and we have little to show for our way of life, except a lot of waste. We can blame the powers that are as they truly are domineering, mean, criminal but we still choose to live the way we live. At times we can even think that others envy us and can be almost sure that those complaining would live exactly as we live having a chance. In a way we consider ourselves “lucky” and when awareness bothers us we turn to false solutions, like if recycling could deal with the amount of damage our consumption causes. It is our way to deflate guilt knowing as we know that after us there will be little left to others.

I like that Cubans seem to know why they live lives different from ours; and if at times they are tempted by stuff or tired of facing challenges to ensure survival, they are still generally happy living as they live. They have created a society rich in social relationships where nobody feels left out or afraid others would envy them, as they all have pretty much the same. After every challenge, I believe, Cubans return to the rhythm of their lives, which reflects their economy and struggles but it is also more than that.

Beyond their pain and loss, Cubans faced in 2016-2017 additional challenges, some old, some new. Among the old, we have of course the blockade, imposed by the US, Cuba’s main barrier to development. The blockade is still very much in place despite talks with the Obama administration and the focus today for Cubans is to move beyond that conversation in the face of a new administration.

The cost of the blockade for Cuba has been estimated in 125,873 million dollars –only Cuba could have survived such hit. Then, among new challenges, we find the world economic recession and its effects on Cuban economic partners; which, in order of importance are: Venezuela (down in a 9.7% in 2016 and probably in a 4.7% this year), China (decreased 6.5%), Spain (decreased between 2-3%), Canada (increased GDP 1-2%) and Brazil (decreased 3.5% in 2016 but expected to grow 0.2% this year). Then, it was hurricane season and hurricane Mathew hit Cuba in October 2016; it affected Guantanamo severely, causing the destruction of about 38,000 dwellings and serious damages to the infrastructure of roads, communication and energy (electricity mainly).

The mentioned challenges have an effect on Cuban exports of goods and services, which decreased in a 30% during this period, with a fall in the prices of exported goods and services as well as reduced volumes exported. This situation particularly applied to a group of goods including nickel and sugar and to services offered, in particular, to the supply of qualified labor force to countries such as Venezuela and Brazil.

Nickel’s price, for example, had increased a 10% for this period (to 10,679 USD per MT) but is still well below the price for 2013-2015 (14,596 USD per MT). Production volume is below expectations (actually 56,000 MT) due to problems with one of their production plants.

Sugar also faced increases in price (18.20 cents per pound) that went beyond sugar prices in 2015 (12.98 cents per pound). However, Cuban sugar production this year was only 80% of expected levels; this was mainly due to climatic challenges (excessive rain followed by drought) affecting the entire country. Thus the levels of 2015 (1,924,000 MT) were not reached in 2016, with 1,500,000 MT of sugar produced.

A different challenge affected oil-derivate products; in this case the levels of exportation actually increased (to 558 million MT) but the products were sold for a value of 228 million USD. Here the challenge was not actual volume of export but the value of the good in the market. For example, in 2015 similar amounts of products (532 million MT) were sold for almost three-times the value of the period (734 million USD). Thus, the price in the market affected the total value which decreased in a 68.9% for similar volumes.

Tourism was a positive sector overall; that is, there was an increase in the number of visitors to the island (13% increase) which reached the record of more than 4 million visitors, and a reported increase in the value of the services of 15%, or approximately 3 million USD. Tourism was the sector that worked best in terms of both market value and volume, which had a positive impact in the economy in 2016.

Export of services overall includes tourism and export of qualified labor force, so together the sector suffered a decreased relative to 2015 (1,170 million USD). The decrease due to the contraction of export of qualified labor force to Venezuela, in connection to challenges the Venezuelan economy is still facing. Further decreases are expected in this sector in the future because it is now facing decreases due to changes in the government of Brazil (now under Mr. Temer) –Brazil faces now both, economic challenges and unfavorable governmental views in Brazil on the import of qualified Cuban labor force.

Looking at imports there has been a decrease of a 10% in 2015 and while an increase of 7% in imports was planned for 2016 this actually did not take place, there was an additional decrease of between 3-9% in this area. The decrease was mainly in fuel imports; food imports where maintained because market food prices went down and allowed Cuba to comply with food imports need.

Food imports benefited from falling prices allowing Cuba to import food products not produced in the country for a total 14% lower than expected.

Fuel imports although lower in prices were also affected for a decreased ability of delivery by PDVSA –connected to mentioned challenges to the Venezuelan economy. Cuba managed, however, to lower consumption of fuel in a 4.4% (369,530 MT) and to reduce electricity production in a 6%.

National oil production:

The production of oil in Cuba continued to decrease, mainly due to a reduction in the number of active oil wells. Cuba has signed agreements with a Russian company (Rosneft) to focus on well recovery and to increase levels of production in the oil fields of Varadero.

National External Debt:

Cuba paid 5,299 million USD in 2016 on external debt as planned. Payment of debt obligations is crucial to Cuba because of its focus on increased access to new credit lines and better conditions of credit. Cuba also wants to facilitate, and increase when possible, Direct Foreign Investment (DFI); this has shown a modest increase in 2016; 83 new deals were signed -14 of which are repeated investments and 15 are investments specific to the area of Mariel while the rest are investments throughout the country.

The total amount of these investments is 1,300 million USD -which comes to about 488 million USD each year (or per 12 months period). Cuban need for this type of investment has been established in between 2,000-2,500 million USD allowing much room for improvement. The International Fair of Havana presented a portfolio including 395 investment projects (120 of them totally new) for an estimated value of 9,500 million USD, with a focus on foreign investment. Remittances from outside have increased and they are estimated to be between 2,000-2,500 million USD for 2016.

Plans for the future: 2017

The goal for 2017 is to focus on economic growth while favoring the following strategies: (1) guaranteeing Cuban exports while ensuring payment within the year, (2) intensifying national production, (3) substituting imports with Cuban products, and (4) reducing expenses.

Cuban expectations by sector are as follows: hotels and restaurants are expected to grow 8%, the aggregate value of the sugar industry is expected to grow as sugar production grows a 12%, an increase of 2-5% is expected in aggregate value in agriculture, industry, transport, communications, generation of electricity, gas and water, construction and commerce. A 3.3% increase is expected in retail trade and 2.7% growth is expected in other activities. Salaries are to increase 3.5% while productivity is expected to grow 6.6%.

Cuban government strategy to offset economic slowdown is to increase government investment; According to Rodriguez an increase of 49% in government funds in support of investment and of 26% in efforts to substituting imports is part of the plan. Government investment implies an increase in fiscal deficit (from 7% in 2016 to close to 12% of GDP in 2017); such deficit will be financed with emission of public bonds.

Facilitating foreign investment in Cuba has been a challenge mainly because of the US blockade and high risk assessment of Cuba by credit rating agencies – such as the Big Three controlling 95% of the credit rating markets –Moody’s and Standard & Poor’s, both American, controlling 80% of the credit rating market and Fitch, with offices in NYC and London, controlling the other 15%.

Foreign investors also express issues with Cuban Law of Foreign Investment (2014) in that there are possibilities of expropriation. They also disagree with having to contract all their labor force (as by Law) through public employment agencies. The process of approval of projects is also slow and it has had a negative impact in the capture of foreign investment; Raul Castro has openly expressed unhappiness regarding the excessive delays in the process of negotiations and promised to change this.

An increase in exports is discussed and includes new exports of high aggregate value such as additional products from sugar, steel of special quality in connection with their nickel and cobalt production, processed food products, quality clothes and shoes, as well as on creative industries, competitive in Cuba, and including art and art related products. An increased focus in further developing tourism with options beyond hotels –like medical and nature tourism, and including the promotion of tourist attractions such as entertainment parks, marinas, golf, theatre, dance and nocturnal centers.

Wednesday, February 1, 2017

Cuban “Left”
Opposition and Annexationists: Two Wings of the Same Eagle

By Arnold August, Published in
Prensa Latina

In my previous article, titled “The
End of Ideology in Cuba?,” I created a fair amount of controversy in stating, “I
have always maintained that the most dangerous opposition to the Cuban
Revolution comes from the so-called left, and not from the openly right Plattists, or annexationists.” The majority of
readers praised the article; many others participated in the serious debate;
and only a couple very strongly objected to it, mainly singling out that
particular sentence.

Thus, let us deconstruct the
perception. It mentions the “openly right
Plattists, or annexationists.” This means that there exists in Cuba both the openly pro-U.S. opposition and the hidden annexationists. The latter
comprises these so-called “leftists.” Their narratives are carefully
constructed to include some (mild) criticism of the American economic, social
and political systems. They do not openly accept capitalism as an alternative,
as opposed to the annexationists, who quite frankly do hold the U.S. up as
their model. An American who has been living in Cuba as the adopted country for
a number of years wrote some thoughtful positive comments on the article and
the issue of socialism versus capitalism:

“Up North, in
its simplest form, you could reduce it to acceptance of the ‘lesser evil.’ Both
systems are flawed, but conveniently, socialism is more flawed, so let’s simply
not go there. Any changes to capitalism are purely cosmetic with the objective
of avoiding socialism. Here [in Cuba], since we have already arrived at
socialism, the argument presented is: capitalism has some good features, let us just add (‘sumar’) those to socialism. Since
the approach is to add to (‘sumar’), rather than subtract from (‘restar’), capitalism
– that is what makes the objective here reverse to the one up North. Instead of
improving socialism with the goal of avoiding
capitalism, their idea is to adopt capitalism’s best features, as though
both systems were compatible, with interchangeable parts, which of course they
are not.”

This is a very good point indeed.
One Cuban whom I consulted likened it to “using the spare parts of a Timex
watch to fix a Rolex.” In this analogy, of course, the Rolex is socialism,
while the Timex is capitalism. Nevertheless, the pieces making up both brands
are just not compatible. It may be argued by some of the so-called “left” that
Cuba is introducing certain market economy measures that amount to capitalism.
However, the market economy existed long before capitalism, even in the most
“primitive” systems. It is not an exclusive feature of any one system:
capitalism did not invent it. In contrast, Cuba’s changes amount to improving
the Rolex but with Rolex brand parts,
and not some old pieces from a totally different and incompatible brand.

Thus, the “left” opposition
objectively contributes to the American Dream of restoring capitalism in Cuba,
even though they of course vehemently deny this. To portray their
anti-capitalist image, some of them even define themselves as
“democratic-socialists” as opposed to the Cuban socialist system, which is supposedly
an authoritarian-type of socialism. The U.S.-centric view of systems
specializes in adding hyphenated tickets to concepts, such as democratic-socialists. “Democracy” is
perhaps the most manipulated concept in politics, an analysis that goes beyond
the scope of this short article. Suffice it to mention for the moment that,
based on the U.S.-centric view, the term democracy
serves as a code word to contradict socialism. In Cuba, when this “democracy”
tag is appended by sleight-of-hand, those in the North interested in subverting
the Cuban Revolution know that the individuals espousing hyphenated socialism
are in their ideological camp.

These and other similar trends
within the “leftist” opposition, although seemingly in contradiction with each
other, have at least one feature in common. Coming from different angles, they
all converge into one common mindset: the Cuban system and government are
“authoritarian,” the Communist Party of Cuba and the Army are omnipresent, and
the system is centralized whereby the state plays too much of a leading role
(even though Cuba has been decentralizing since 2008, but on its own terms
within socialism). This opposition outlook ostensibly favours socialism, but
their “socialism” is so very democratic. In order to foster this image, every
incident in the Cuban system is pounced upon in order to paint Cuba as
authoritarian. By relying mainly on some intellectuals, the “leftists” have set
their sights on atomizing and dividing Cuban society, with the goal of
destroying the unity it has been building since 1959.

In contrast, other Cuban commentators
supporting the openly right annexationist trend criticize the Cuban government
for not going far enough or fast enough in adopting what they also call “capitalist
measures.” The annexationists openly
advocate capitalism for Cuba under the tutelage of the U.S. This tendency also
blames the “authoritarian” government for holding back what they envisage as
Cuba’s inevitable slide into capitalism. Thus, “democracy” is manipulated by both
the so-called “leftists” and the openly pro-U.S. and capitalist right.

There is another common denominator
linking these two seemingly opposite extremes. There is no doubt that in Cuba
today people engage in lively discussion and debate about improving Cuba’s
socialism and political system. The attitude toward the U.S. in the new and
complicated post-December 17, 2014 context is, of course, tied to these
controversies. These deliberations are taking place at many levels and in
various circumstances in the Cuban social and political systems. Carrying on a
long-standing tradition, these debates constitute a feature of Cuban political
culture. If, at this time, one takes the Cuban media as an example, a range of
opinion articles is increasingly being published in the official press, such as
Granma and Juventud Rebelde. Some of the pieces are written by what one could
call “alternative” journalists and writers, such as Iroel Sánchez, Elier
Ramírez, Enrique Ubieta, Luis Toledo Sande and Esteban Morales, just to name a
few. These intellectuals and many others have their own active blogs and they
participate daily through social media to resist the U.S.-led cultural war.

However, when the “left” or right
opposition describes Cuba for the benefit of both foreign and some domestics
consumption (and make no mistake about it, their views can be found in the
foreign press hostile to Cuba), they invariably applaud and highlight what they
call “opposition” or “alternative” journalists. The “leftist” opposition forces,
supposedly the epitome of pluralism, cite only themselves and like-minded
opponents, a very monolithic approach. This is also how the U.S. establishment
media deals with debate. They cite only their own kind: a perverse consanguinity.
In contrast, the real Cuban alternative intellectuals (only some of whom are
mentioned above), those who work within the system for improvements, are
blacklisted (or even vilified) by the “leftists.” They bestow these credentials
on what they consider bona fide “alternatives,” invariably stirring up a
backwash of invitations for both the “left” and right to travel to the U.S. or
appear on foreign media in Cuba in exchange for delivering the goods: “Cuba is
authoritarian or a dictatorship. Amen.” This quid pro quo is quite flagrant, to
the extent that for a Cuban to receive these credentials from them could be
considered the kiss of death.

Thus, both the “leftist” opposition
and the openly right-wing annexationists are two wings of the same American
eagle. One cannot underestimate their influence on some intellectual sectors in
Cuban society – it would be naive to do so. However, it would also be wrong for
the two wings to overestimate their appeal to Cuban society, because Cuban
socialism is characterized by an exceptionally high level of political
consciousness broadly accumulated over many decades. This allows Cuban
revolutionaries and patriots to see through their manipulation and thus in the
process further enrich the Cuban Revolution’s ideological heritage.

Arnold August, a Canadian journalist and lecturer, is the
author of Democracy in Cuba and
the 1997–98 Elections and, more recently, Cuba and Its Neighbours:
Democracy in Motion. Cuba’s neighbours under consideration are, on the
one hand the U.S.and
on the other hand Venezuela, Bolivia and Ecuador. Arnold can
be followed on Twitter @Arnold_August and FaceBook